May 16, 2024 12:05
Bitcoin prices have been trending lower in the past couple of weeks and generally remain within a bearish formation. Although momentum appears to be picking up, bulls are not out of the woods just yet. Analysts are not losing hope and remain overly upbeat, expecting a surge that would take the world’s most valuable coin to new levels. Bitcoin Forms A “Cup And Handle” Formation In The Weekly Chart In a post on X, one of them, MikybullCrypto, said Bitcoin has formed a “cup and handle” reversal pattern, suggesting an imminent surge towards new all-time highs. This formation is a glimmer of hope for optimistic traders, especially now that prices have been moving lower and sideways, erasing gains posted in March. The “cup and handle” formation is a technical pattern chartists use to identify potential reversals and confirm trend continuations. In the current setup, as identified by the trader on the weekly chart, the “handle” was formed after the recent price drop from all-time highs. The “cup” follows the price decline in 2022 and the subsequent recovery in 2023. Related Reading: Crypto Analyst Shares Top AI Altcoin Investments This Month Historically, if there is a breakout above the handle and the rim of the cup, prices tend to rally to new levels. For this reason, the analyst says that if buyers press on from spot rates, the breakout above the current range and all-time highs of $73,800 will be “explosive.” For now, prices remain in a descending channel with clear resistance levels marked out in the immediate term at around $66,000 and $72,000. A breakout, reading from the candlestick formation in the daily chart, above these liquidation levels could spark demand, lifting the coin to new levels. Will Miners Dump BTC And Force Prices Lower? However, lurking beneath the optimistic outlook is a potential storm cloud: declining on-chain activity. After the brief spike in on-chain activity on Halving Day due to the launch of the Runes protocol, transaction fees have been declining. According to YCharts, it is currently at $3.206, down from over $128 on April 20. This contraction means miners are getting less revenue, heaping more pressure now that there is more pressure on margins post-Halving. Related Reading: XRP To Nearly $600? Analyst Makes Bold Claim, But Can It Overcome Legal Hurdles? Now that miners are feeling the pinch of slashed block rewards and declining transaction fees, it is likely that they might liquidate some of their BTC to stay afloat. Their participation, especially in the secondary market, would heap more pressure on BTC, forcing prices lower. Feature image from Shutterstock, chart from TradingView
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